The electrical power industry in the United States and other countries is characterized by a network of regional power pooling arrangements among various power generators and users. In a typical pooling arrangement, several pool participants contribute generation and transmission resources to form a regional power generation and delivery system. Typically, one organization, which may be co-owned or be a joint venture of the pool participants, is responsible for operating the regional power generation and distribution system. Such an organization may also be referred to as an Independent System Operator (ISO).
One ISO has proposed an energy market which comprises a multi-settlement system and a fixed transmission rights (FTR) auction system. (See “Operating Agreement of PJM Interconnection, L.L.C.,” Dec. 31, 1997). This proposal calls for a “two-settlement” system and a Fixed Transmission Right (FTR) auction system. The two-settlement system is to perform scheduling and price calculations for a day-ahead and a real-time market for energy. The FTR auction system is to manage the auction of FTRs. An FTR entitles its holder to revenues (or charges) based on the capacity of the FTR and the energy price difference between a source and a sink. As such, an FTR can be used to provides its owner with the right to transfer a specific amount of power over a transmission path for a specific price, regardless of congestion charges that might otherwise apply.
The provisioning of resources in a deregulated, market-oriented power generation and delivery system is a complex, multi-dimensional problem which must be solved repeatedly and accurately to ensure the efficient and secure operation of the system. This problem is further complicated by the integration therewith of an energy market system such as the aforementioned. Unlike conventional markets, such as securities markets where financial interests are exchanged, the transactions of an energy market, as proposed, are subject to the physical constraints of the underlying energy system. It is unclear how the security and efficiency considerations in the operation of a power system can be reconciled with the dynamics of an open market system.
There is therefore a need for a system that can support a forward market for the provision of energy over a power system while ensuring the efficient and secure operation of the power system.